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January 18, 2009 – Is the Fear of Keeping Gold Bars in the US Justified?

Many investment dealers of gold coins justify the price paid for aged or antique coins, often by non-collectors, by invoking the specter of Executive order 6102, known by some as the gold confiscation act. But, how likely is that sort of action to happen again, and are the coins that are sold as being “non-reportable” actually of any benefit to a potential investor buying gold bullion?

For starters, if an economic crisis were to make it reasonable to devalue the US dollar in the very same fashion, the odds of the corresponding order of being exactly the same are unlikely. Anything that was (or wasn’t) technically legal in the 1933 legislation is likely to be reclassified to achieve as high a rate of compliance with the compulsory sale of privately-held gold supplies as possible.

In 1933, for instance, nearly 500 tons of gold (over 17.6 million ounces) were turned in for the set value of $20.67 per troy ounce before the price for international commerce was set by the government at $35.00 per troy ounce. Since the introduction of fiat currency that trades on the world market, there are surely easier ways to change the value of the dollar if necessary at this point in history.

Since there were no actual arrests of US citizens in conjunction with this order, and the only person actually charged was later acquitted on a technicality, it is clear that this law was intended, despite the hefty fine and jail-time associated with it, to serve a purpose rather than change the nature of ownership.

Since Gerald Ford made the “hoarding” of gold legal for both private citizens and banks in 1974, banks have been reluctant to deal in gold accounts, but it is legal to do so. As such, US banks are now just as reasonable a repository for gold as those in Europe and often serve as an agent when buying gold bullion. The stories of safe-deposit boxes being confiscated are long-delayed Internet rumors. In fact, with gold bars or gold bullion in your safe deposit box, even if your bank fails, the government will deliver it to you, unopened.

As is, there is no difference between buying gold bullion bars and coins that have been recently minted, as opposed to older coins, other than the market you wish to sell them in. While the gold market for investors is little concerned with the overall quality of the piece, it can take years of study to have a good feel for the coin collecting marketplace. It is easy for newcomers to be shined on with grades that are not accurate, in the case of non-certified coins.

Gold bars are generally considered a safer investment, given that even when the commodities markets are swaying, in the event of serious economic turmoil, the value of an ounce of gold, clearly stated on the surface as such, will undoubtedly be worth more consideration than the difference between a rating of 60 or 65.

In short, the fear of gold confiscation is generally more of a sales tactic than good advice. US citizens are very likely to hold on to their gold savings as long as they like.